I’m a staff writer covering all things Wall Street and Investing. I have a love hate relationship with the world of finance. I am fascinated by the industry’s power and influence around the globe, and the ingenuity of the people it employs. Not so much a fan of the lack of accountability when the system fails—which it often does: I'm always on the hunt for people and companies to profile.

Marriott's Upgrade: New CEO Arne Sorenson Freshens Up The Brand For Millennials

Indeed, there are step-by-step instructions for just about everything at Marriott. Changing bed linens? Step one: Knock three times before entering a hotel room. Step two: Place clean linen on the night stand. Step three: Strip the bed and use the dirty fitted sheet as a package for the rest. It goes on–until the bed is made perfectly. In all there are 66 distinct steps to cleaning a room, all of which must be performed flawlessly in about 20 minutes (Secrets To Cleaning A Marriott Hotel Room). It gets even more intense because these how-to details vary significantly among Marriott’s many different brands. “I’ve never seen anything like it,” says Tina Edmundson, a veteran of the Starwood’s W hotels, hired by Marriott to overhaul its Renaissance brand.

It was Bill Marriott's micromanaging that got Arne Sorenson into the company in the first place.

Enter Sorenson, who admits he is a hands-off manager. Already he has delegated significant power and autonomy to four regional presidents around the globe. The idea is to make Marriott more nimble. Sorenson illustrates Marriott’s problem: About five years ago the development team from Bethesda wanted to convert a residential building in Hong Kong into a Courtyard hotel. The operating team, however, didn’t think the elevators in the building were sufficient. The two groups ended up needing intervention from headquarters. “That decision ended up coming to Bill Marriott’s desk, who was sitting in Bethesda trying to decide if he has enough elevators in a building in Hong Kong. That’s madness,” says Sorenson.

It’s ironic, then, that it was Bill Marriott’s micromanaging that got Sorenson into the company in the first place. Marriott went through a dark period in the late 1980s. After the company had become one of the largest real estate developers and borrowers in the country, accounting for one-third of new hotel construction, commercial real estate collapsed.

Embroiled in legal battles, Marriott brought in law firm Latham & Watkins. Sorenson, one of the partners, was assigned to the client. “Bill Marriott used to walk from his office to the company’s treasury department every Friday afternoon to see if there was enough money to make payroll,” Sorenson recalls.

Despite their style and management differences, the two bonded. Marriott is an observant Mormon, and Sorenson is the son of a Lutheran pastor and was born in Tokyo while his parents did postwar missionary work. Bill Marriott’s obsessive micromanagement of the trial led him to call Sorenson constantly, often at home during the evening. “That detailed focus and thoroughness is classic Bill Marriott,” says Sorenson. “He’s patient but not in a passive way where you can take all the time you need.”

After five years Sorenson found himself joining Marriott as the head of M&A. “I agreed to join on the condition that I wouldn’t be a lawyer,” he says. “I wanted to try something new.” His first big deal was buying Renaissance Hotels for $1 billion, thwarting a rival offer from DoubleTree. The upscale Renaissance brand is currently one of the company’s biggest, with 155 hotels and more than 52,000 rooms. Over the next 15 years Sorenson would run operations in Europe and serve as CFO and COO, en route to the top job.

Meanwhile, Bill Marriott, in sorting out the real estate disaster, sowed the seeds of Marriott’s current growth. He rehired former treasurer Stephen Bollenbach, fresh from his Trump workout (where he got banks to writedown Donald’s debt), who created a plan that would split Marriott Corp. in two, putting its real estate and debt into Host Marriott and creating a hotel-management company, Marriott International.

The move left bondholders seething, but it proved a pivotal moment for the company, which became the first major hotel to exit the real-estate-ownership side of the business. That big change unburdened Marriott International’s business model and caused it to concentrate on its core strength: customer service. It could now grow more rapidly without real estate risk.

Virtually all of Marriott’s 3,800 hotels–a portfolio worth some $150 billion, Sorenson estimates–are now owned by REITs, private equity firms or big investors. Marriott International either manages the hotels, meaning it brings in its own employees to run the places, or franchises its brand and operating systems to hotel owners who hire third-party managers approved by Marriott. Today 43% of Marriott’s hotel rooms are managed by Marriott and 54% are franchised.

“Real estate comes with a lot of debt, and that causes variables in the bottom line,” says Nikhil Bhalla of FBR Capital Markets. “When you do what Marriott does you do away with that risk, and your revenue comes straight from the top line of your hotels.”

And while Marriott’s 3-and-25 fee structure (3-and-10 in Asia, because owners don’t have thresholds) trumps the typical hedge fund, it gets even better. Hedge funds generally get a one- or two-year lockup, but Marriott International’s management agreements lock up hotel owners for as long as 50 years.

In 2012 Marriott’s revenue from managed hotels was $813 million, with $581 million in top-line fees and $232 million in incentive fees. Marriott franchisees pay the company 5% to 8% of their room revenue and about 3% of their food and beverage sales. All told, franchise fees amounted to $607 million in 2012, up from $506 million a year earlier. In 2012 Marriott reported strong operating income. Net incomes soared however, because it booked a $296 million gain when it spun off its time-share business.

And though employees of Marriott-managed hotels earn paychecks signed by Marriott’s treasurer, their pay is actually reimbursed by hotel property owners. In fact, Marriott is paid by owners for all sorts of costs, including sales and marketing, revenue management and accounting. Renovations are also paid by owners. Reimbursements totaled $9.4 billion of Marriott’s $11.8 billion in 2012 revenue. Says one hotel owner: “They call all the shots.”

As hotel brands go, there are few stuffier than the Essex House, which conjures thoughts of a billionaire stepping out for a carriage ride in Central Park. Under Marriott management since September 2012, it is undergoing an $18 million face-lift.

At a gala celebrating their takeover, hundreds of people crowded into the hotel, which was adorned with a red carpet. In lieu of chamber music, Jon Bon Jovi rocked the crowd.

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